Choosing Your Regular Playgrounds

As explained above, it's important to work in a place which allows you to save a higher absolute figure for your Monthly/Regular Savings amount. Usually this means a large city in a developed country.

But the ideal playground---where you spend your time when you retire and spend your retirement income---should be the opposite: low costs. From the financial angle, these should be in developing countries. Of course, if you prefer developed countries like Western Europe or Japan, then you need a larger retirement fund.

So, the logic behind why some people can afford to retire much earlier is: there is a economic gap between where they accumulate their savings and where they spend your savings.

Most people can, with enough willpower, save up US$1,000 or more every month by working in a big city in a developed country. Younger people might take a second part-time job to attain this level of savings. If this (US$12k/y) is invested in a balanced fund (stocks and bonds) and earns a compounding rate of 7% per year, it take 12 yrs to reach a savings of US$215k. This assumes that the savings rate doesn't increase over the years when the person's salary should have increased as a result of higher mastery of the habit of saving and his professional skills through experience. If a person had started to do this at age 20 straight after university, then he could have attained the US$215k in his early 30s. If he had done this for 15y, the nest egg would have grown to US$302k. As illustrated, this could be sufficient to sustain the retirement of many young retirees who live within the budget of US$10k/y.

After illustrating with the figures, it's not difficult to understand why so many people had managed to retire young and become a global nomad. What you need are:
1) Start early, preferably in your 20s. Time will be on your side
2) Cut your expenses and save regularly
3) Invest regularly using Dollar-Cost Averaging. In simple words, a same amount every month, whether the market is up or down. When the market is down you buy more units of the fund. Over the long term, time is on your side, because when the market recovers, the additional units of fund will be worth more.
4) Invest in a balanced, diversified fund with 50-70% stocks and 30-50% bonds. Keep your investments simple. This money should be something you don't need and won't need in the future 15-20 years, and which you can set aside for long term investment.
5) Buy insurance while you are young and healthy.
6) If you have dependent parents, insure them. This safeguards you against the possibility of having to use your savings to pay for their healthcare if they become sick uninsured. Also, manage their retirement income in such a way that their savings can sustain their retirement (without having to mess with your savings).
7) Do your health screenings annually and treat any disease you discover as early as possible. Good health=less costs.
8) Minimize the number of dependents. If you are single, you have less dependents, so it's easier for your to save up as much as possible and to make the transition to nomadic lifestyle.

So, kick-start your US$1k/month regular savings plan asap.